This paper considers the role of product relatedness on promotion of trade in the context of agriculture sector. By using relevant data over the period 2001-2018 for Iran and its major agricultural trade partners, the Hidalgo proximity index and multilevel panel regression model are estimated. Main findings revealed considerable and statistically significant impact of product relatedness on trade of agricultural products. In other words, the greater share of related products in agricultural trade basket the higher will be value of agricultural trade. Moreover, distance between trade partners showed an indirect relationship (as expected) on trade value.

agriculture trade, proximity index, multilevel panel, Iran.